Collusion and the Political Differentiation of Newspapers

CentER Discussion Paper Series No. 2012-024

TILEC Discussion Paper No. 2012-014

72 Pages Posted: 27 Mar 2012 Last revised: 5 Apr 2012

See all articles by Lapo Filistrucchi

Lapo Filistrucchi

Tilburg University, TILEC; University of Florence, Dipartimento di Scienze Economiche

Marco Antonielli

Barcelona Graduate School of Economics (Barcelona GSE)

Date Written: March 26, 2012

Abstract

We analyze a newspaper market where two editors first choose the political position of their newspaper, then set cover prices and advertising tariffs. We build on the work of Gabszewicz, Laussel and Sonnac (2001, 2002), whose model of competition among newspaper publishers we take as the stage game of an infinitely repeated game, and investigate the incentives to collude and the properties of the collusive agreements in terms of welfare and pluralism. We analyze and compare two forms of collusion: in the first, publishers cooperatively select both prices and political position; in the second, publishers cooperatively select prices only. We show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001), while collusion on both prices and the political line would tend to mitigate it. Our findings question the rationale for Joint Operating Agreements among US newspapers, which allow publishers to cooperate in setting cover prices and advertising tariffs but not the editorial line. We also show that, whatever the form of collusion, incentives to collude first increase, then decrease as advertising revenues per reader increase.

Keywords: collusion, newspapers, two-sided markets, indirect network effects, pluralism, spatial

JEL Classification: L41, L82, D43, K21

Suggested Citation

Filistrucchi, Lapo and Antonielli, Marco, Collusion and the Political Differentiation of Newspapers (March 26, 2012). CentER Discussion Paper Series No. 2012-024; TILEC Discussion Paper No. 2012-014. Available at SSRN: https://ssrn.com/abstract=2028903 or http://dx.doi.org/10.2139/ssrn.2028903

Lapo Filistrucchi (Contact Author)

Tilburg University, TILEC ( email )

P.O. Box 90153
Tilburg, Noord-Brabant NL-5000 LE
Netherlands
+31 13 466 3360 (Phone)
+31 13 466 3042 (Fax)

HOME PAGE: http://www.lapofilistrucchi.com

University of Florence, Dipartimento di Scienze Economiche ( email )

via delle Pandette 9
Florence, Florence IT-50127
Italy
+39 055 2759579 (Phone)
+39 055 2759910 (Fax)

HOME PAGE: http://www.lapofilistrucchi.com

Marco Antonielli

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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